National Bank to reduce NPEs by 11.5 bln euros by 2021, CEO says

National Bank aims to reduce its non-performing exposure by 11.5 billion euros by 2021, of which 4.5 billion this year, Paul Mylonas, the bank’s CEO said on Thursday.

“Efforts to turn around operating profitability bore fruit in the fourth quarter of 2018 as core operating profitability reached 46 million euros, taking the full year core profitability to 114 million against losses of 103 million euros in 2017. Most importantly, the NII has reversed trend, reaching 269 million euros in the quarter, operating costs declined by 4 pct on a quarterly basis, starting to reflect the impact of the voluntary exit program (which mainly occurred in H2. The year 2019 is a pivotal year, as NBG is capitalising on balance sheet strengths and making significant progress on improving operating profitability and reducing NPEs aggressively. As already evidenced in the fourth quarter of 2018, operating trends will improve markedly, driving group operating profit significantly higher on a year-on-year basis. Moreover, NII will benefit by 113 million euros on an annualised basis from the swap of the Greek State IRS for GGBs concluded in mid-February, also simplifying the bank’s asset structure, improving liquidity and reducing further funding costs. Fees will be supported by loan origination, budgeted at 3.6 billion euros in 2019, following buoyant disbursements of 1.2 billion in the fourth quarter. With LCR and NSFR ratios well above 100 pct, and a substantial cash buffer, NBG is taking the driver’s seat in new corporate disbursements. Finally, the decline in staff costs will accelerate, reflecting both the current VES, as well a new larger scale VES to be launched before mid-year. NBG’s new NPE operational targets are front-loaded and more aggressive, aiming for an NPE reduction by 11.5 billion euros by 2021 at the Group level, of which 4.5 billion in 2019, facilitated by our high cash coverage ratio of 59 pct. The NPE ratio will be in the low teens by 2021, and near mid-single digits by 2022. Aiming to capitalise on NBG’s strong competitive advantages, also addressing weaknesses to unlock the Bank’s profitability potential, our large-scale Transformation Program has an ambitious set of financial and business targets for 2019-2022, focusing on specific strategic areas. The new strategy will be presented to investors in London on May 16, the day following the release of the first quarter results,” Mylonas said in a statement, commenting on the bank’s 2018 results.

National Bank said domestic deposit recovery continued in the fourth quarter of 2018 (+1.7 billion euros on a quarterly basis), Eurosystem funding (TLTRO) was just 2.3 billion euros from 2.8 billion a year earlier and cash balance was at 5.1 billion euros as at end of 2018.

CET1 ratio at 16.1 pct. Group profit after taxes from continuing operations was 50 million euros in 2018 against losses of 158 million in 2017. Operating profit recovered to 71 million euros in Greece (-135 million in 2017. Operating expenses were 4 pct lower on a quarterly basis on personnel reduction and branch closures. Loan impairments at 293 million euros in Greece (-62 pct yoy. Domestic PAT from continuing operations was 32 million euros vs losses of 175 million in 2017.